U.S. growth likely to remain around 2 pct in short-term, unlikely to be hit by Trump’s policy uncertainties

The economic growth of the United States is expected to remain around the 2 percent mark in the short-term and is unlikely to be hit by Trump’s prospective policy which is in for a significant regime shift in the American history.  Domestic policy changes can be expected to be more modest due to likely resistance from Congress, even within the Republican Party.

However, in the medium to long term, uncertainty is set to rise and the negative effects of more protectionism and tougher immigration policy will dominate the possible positive effects of less regulation, lower taxes and infrastructure spending, Danske Bank reported.

Throughout the election campaign, Trump has shifted stance and most recently he criticized the low-interest rate policy. Trump has said that the Fed has created 'a false stock market' and that Yellen is 'very political' as rates are low because of Obama.

In reaction to the impact over the Federal Reserve, the market is pricing for Donald Trump to take over Janet Yellen in 2018 as the latter stands for Democrats.

"We still expect the Fed to hike in December, as we expect financial markets to recover before the December meeting and do not expect a major impact on confidence indicators in the short term," the report commented.

Meanwhile, risk sentiments are mounting across the globe, with the benchmark S&P 500 Futures index down 3.39 percent to 2,063 points, while Nasdaq 100 Futures breached 4 percent fall following Trump’s victory over the U.S Senate as well as the House of Representatives. Further, the 30-share benchmark Sensex followed the U.S. benchmark, dropping 3.04 percent to 26,751, while Nifty 50 plunged 3.10 percent to 8,278.10.

USD/MXN has risen sharply on Trump's win and it may rise further to 21.5 over the next few days, given Mexico's large trade share with the US and Trump's sharp rhetoric.